Air Products PLC was awarded a five-year contract to supply oxygen services starting in February 2006.

Home oxygen services had previously been supplied on GP prescription through local community pharmacists.

But the report found that the new arrangements failed almost immediately.

The company was unable to provide any contingency in the event of problems and was not able to cope with the unprecedented and unforeseen demands placed on the new service by patients and health professionals.

The report recommends that for future similar England and Wales contracts, the Assembly government should be able to vary new contractual arrangements within Wales to mitigate risks.

The Assembly government should also make provisions for possible problems when planning timescales.